Cigarillos was the only positive performer in retail volume terms within cigars, cigarillos and smoking tobacco in 2018. Increasing taxes resulted in higher unit prices across the category.
With the increasingly high prices of cigars in New Zealand due to rising taxes, this niche category continued to record strong retail volume decline in 2018. However, similar to cigarillos, there was a notable trend towards small cigars, which continued to gain volume share from standard cigars, while demand for the large format continued to wane as it recorded the strongest decline in volume sales.
The largest category in value terms, smoking tobacco, continued to decline in retail volume terms as it recorded the highest unit price increases within fine cut tobacco, resulting in its stronger volume decline compared to pipe tobacco. The latter remained a niche in New Zealand, perceived as an outdated and traditional tobacco format, mostly purchased by older consumers, although there was also low demand for smokers of shisha.
The large but declining category of fine cut tobacco continued to be dominated by multinationals in 2018, led by British American Tobacco (New Zealand) Ltd, holding more than double the retail volume share of its nearest competitor Imperial Tobacco New Zealand Ltd. Although the majority of the leader’s brands recorded strong declining sales, its newer brand within the category, Rothmans Red, recorded another year of impressive retail volume growth.
The strongest performing cigarillos continued to be led by Philip Morris (New Zealand) Ltd in 2018 with its leading brand Willem II Wee Willem. However, the player is starting to focus its efforts on heated tobacco in the country, and lost some retail volume share to more dynamic performers including Davidoff Mini Cigarillos from Genève Davidoff & Cie (with triple-digit volume growth from a low base), Montecristo Minis from Corporación Habanos SA, and Romeo y Julieta Mini from Corporación Habanos SA, all supported by the demand for smaller cigarillos in 2018.
With consumers looking to make savings amidst increasing costs for smoking tobacco, smaller pack sizes were appreciated and are likely to see some demand over the forecast period despite overall declining volume sales.
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